The Truth About iBuyers

Michael Carr Real Estate Leave a Comment

And now the truth comes out?!  It should not be a big surprise that Zillow, Opendoor, Offerpad and other iBuyers are paying under-market prices to individuals, but is it a surprise that they are selling to institutional investors that keep them off of the open market? 

Every house that sells to a hedge fund or private equity firm for large rental portfolios is a home and opportunity taken away from a family wanting to purchase the American Dream.  According to an Inman article written by Matt Carter, one in five houses resold by these iBuyers in 2021 ended up going to institutional buyers and other private equity entities.  He called it “a secret pipeline” with the potential to exacerbate inventory shortages in many markets.

In the article, Matt says that Bloomberg did an analysis of 100,000 property records compiled by Attom Data Solutions and found that iBuyers sold thousands of homes to landlords backed by KKR & Co., Cerberus Capital Management, and hedge fund behemoth Blackstone Inc., as well as other private ventures.

So let me get this straight.  Is the truth about the intentions of the iBuyer movement finally coming to the surface?  As we predicted at Michael Carr and Associates, Inc. more than 2 years ago, the iBuyer movement isn’t ‘for the people’,  it’s for ‘the profit’And furthermore, Zillow has proven that they are not good at it!

The good news is, the losses that all of the iBuyers are facing will show that they have a long way to go toward profitability, but they will achieve that at the cost of all the families that their pricing structure preys upon.  The worst news is that this adversely affects the (selling) families, themselves, AND also hurts the (purchasing) family who wants to own a piece of the American Dream. It also totally disrupts the overall market inventory shortages we already face.  The National Association of REALTORS predicts the current shortage to be 5 million homes in the United States.  

The takeaway is this; the iBuyer movement will rarely, if EVER, be the best option to sell your home.  Here at Michael Carr and Associates, Inc., Anything Real Estate we have the Confidence of over 78,000 real estate transactions and ALL of our sales are focused on getting you the most money in the fastest time frame reducing the stress of showings, repair costs and time delays.  I have been in the industry for 28 years and cannot see a reason to sell through portals that admittedly pay less than market value, and sell to other “private entities” that worsen the housing shortage we face in America.  Wall Street doesn’t need the profit; our families do.

Zillow begrudgingly agrees, and I think in the short future we will see many of the other iBuyers follow their example of non-profitability.

About the Author
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Michael Carr

Michael Carr is The Abundant Life Broker® that currently dedicates his time to helping real estate agents across the globe maximize the success of their lives by first approaching their career from a place of abundance. He has been an auctioneer since 1991 and has sold billions of dollars in residential and commercial properties, autos, and heavy equipment. Since becoming a licensed real estate agent in 1994, Michael has been actively involved in the sale of over 78,000 homes and licensed in as many as 27 states in the continental U.S. as a broker and an auctioneer. Overall, he has conducted over 10,000 auctions throughout the last 28 years. Michael Carr & Associates, Inc. Anything Real Estate® was founded in 2000 and serves as the umbrella corporation for his real estate and investment companies. Michael also co-authored a marketing and personal branding series called BrandFace® to help entrepreneurs achieve the level of success they desire. See www.BrandFaceStar.com for more information. "The Abundance you feel is the Abundance you achieve"